Total expenditure on education has two components - public and private. In this chapter, the data for the public component is compiled in accordance with the International Monetary Fund's Government Finance Statistics (GFS) framework, while the private component is sourced from the Australian System of National Accounts.

It is not possible to simply add the public expenditure on education aggregate to the private expenditure on education aggregate to get a figure for total expenditure on education for two main reasons. First, the data presented here are for the general government sector only and do not cover expenditure on education by other sectors of the government. Secondly, double counting may also occur because the Australian (Commonwealth) Government records expenses when supplying grants to private schools which in turn spend these grant amounts, thus producing two expenditure transactions.

Data for individual time periods are expressed 'in current prices', or in terms of prices prevailing at the time. Consequently, changes from period to period in, for example, the value of operating expenses may be affected by price changes.

General government expenditure

The GFS provides a framework for measuring and analysing the financial activities of government. The GFS data presented in this chapter is recorded on an accrual accounting basis. This means that transactions are recorded in the period in which income is earned or expenses incurred, regardless of when a cash payment is made. Further information on the GFS framework may be obtained from Australian System of Government Finance Statistics: Concepts, Sources and Methods (5514.0).

Operating expenses on education include employee expenses, non-employee expenses, depreciation of fixed assets, and current and capital transfer expenses. Operating expenses for all levels of government classified by purpose are shown in table 10.29. Operating expenditure in 2003-04 was $43,611 million (m), an increase of $2,414m from the previous year. This largely reflects increases in expenditure on primary and secondary education of $1,305m and tertiary education of $808m.

Table 10.30 shows the operating expenses on education for each level of government for the period 1999-2000 to 2003-04. Total operating expenses of state and local government increased by $1,725m from 2002-03 to 2003-04, while operating expenses for the Commonwealth Government increased by $1,289m. Intra-sector transfers are transfers or transactions that occur between different levels of government for the purposes of education.

10.30 GOVERNMENT OPERATING EXPENSES ON EDUCATION, By level of government

1999-2000

2000-01

2001-02

2002-03

2003-04

$m

$m

$m

$m

$m

Commonwealth Government

9,959

10,970

11,769

12,109

13,398

State and local government

23,814

25,300

27,273

29,526

31,251

Multi-jurisdictional(a)

8,654

9,258

9,993

11,124

11,718

less Intra-sector transfers

9,693

10,333

11,159

11,562

12,756

Total

32,733

35,195

37,875

41,197

43,611

(a) The multi-jurisdictional sector currently contains units where jurisdiction is shared between two or more governments, or the classification of a unit to a jurisdiction is otherwise unclear. The main type of units falling into this category are public universities.

Sales of goods and services (table 10.31), from a GFS perspective, is defined as the revenue from the direct provision of goods and services by general government. In the context of education, this would include fees paid by students for the provision of education services. Tertiary education has by far the highest value for sales of goods and services of any level of education, with a total of $7,025m in 2003-04. Sales of goods and services from tertiary education institutions increased by $313m (4.7%) from 2002-03 to 2003-04. Primary and secondary education institutions had sales of goods and services of $623m in 2003-04.

Table 10.32 shows the amount of Commonwealth Government grants to different levels of government by level of education. Primary and secondary education was the major recipient of grants from the Commonwealth in 2003-04 with $6,538m, while the universities sector received a total of $4,396m for the same period.

10.32 COMMONWEALTH GRANTS TO OTHER LEVELS OF GOVERNMENT, By level of education - 2003-04

Primary and
secondary education

Technical and
further education

Universities

Other

Total

$m

$m

$m

$m

$m

State and local government

New South Wales

2,189

365

-

41

2,595

Victoria

1,669

276

-

9

1,954

Queensland

1,212

185

-

38

1,435

South Australia

494

86

-

10

590

Western Australia

634

100

-

29

763

Tasmania

148

28

-

3

179

Northern Territory

68

15

-

35

118

Australian Capital Territory

124

21

-

2

147

Total

6,538

1,076

-

167

7,781

Multi-jurisdictional(a)

-

-

4,396

-

4,396

Total

6,538

1,076

4,396

167

12,177

(a) The multi-jurisdictional sector currently contains units where jurisdiction is shared between two or more governments, or the classification of a unit to a jurisdiction is otherwise unclear. The main type of units falling into this category are public universities.

Private sector expenditure on education (sourced from the Australian national accounts) consists of gross fixed capital formation by private educational institutions and household final consumption expenditure on education services.

Gross fixed capital formation in the field of education is estimated from statistics of the value of work done on new building and major additions to buildings of private educational institutions.

Household final consumption expenditure on education services is estimated as: fees paid by persons to government schools (including technical and agricultural colleges); fees (other than boarding fees) and gifts to universities, independent schools, business colleges, etc.; plus current expenditure of non-profit educational institutions (net of fees and other current receipts). Expenditure on such items as school books, uniforms, fares for students' travel, etc. and expenditure by parents' associations on school equipment are not included.

Table 10.33 provides data for private sector expenditure on education. Both gross fixed capital formation and household final consumption expenditure have increased in every year since 1999-2000. For 2003-04, household final consumption expenditure comprised 86% of the $13,329m total for private expenditure on education.

10.33 PRIVATE EXPENDITURE ON EDUCATION

1999-2000

2000-01

2001-02

2002-03

2003-04

$m

$m

$m

$m

$m

Gross fixed capital formation

1,155

1,296

1,491

1,685

1,815

Household final consumption expenditure

8,798

9,415

10,068

10,758

11,514

Total

9,953

10,711

11,559

12,443

13,329

Source: ABS data available on request, Australian System of National Accounts, 2003-04.

FUNDING BY SECTOR

Schools

The primary and secondary education operating expenses of all levels of government totalled $23,722m in 2003-04 (table 10.29). Operating expenses associated with preschool, special, and other education were $1,736m. Preschool, primary, secondary, special school and other education expenses were largely met by state and territory governments. State and territory governments also contributed funds to the transportation of students, totalling $1,336m in 2003-04.

While primary and secondary education is free in government schools in all states and territories, fees may be charged for the hire of text books and other school equipment (particularly in secondary schools). Voluntary contributions may also be sought from parents.

In addition to funding schools directly, most state and territory governments provide financial assistance to parents (under specified conditions) for educational expenses of school children. Assistance includes scholarships, bursaries, and transport and boarding allowances, many of which are intended to assist low-income families. The Australian Government also provides a number of assistance schemes to facilitate access to education.

Vocational education and training (VET)

Information supplied by the National Centre for Vocational Education Research shows that VET providers in receipt of public funds primarily receive recurrent revenue from the state and territory governments (55% or $2,619m in 2004) with additional funds being provided by the Australian Government (22% or $1,049m). Recurrent revenue comprises revenues appropriated by the Australian Government and state and territory governments to fund the normally occurring business activities of the sector and specifically excludes funds for capital asset construction, improvement or replacement.

The remaining 23% ($1,063m) is made up of on-going (recurrent) revenue earned by the sector from fees and charges arising from fee-for-service activities (11%), student fees and charges (5%) and other ordinary operating activities (7%).

Most providers charge students fees for the administration of VET courses, for tuition, for materials or for student amenities. These fees vary according to the type of course and its duration.

Higher education

Most higher education institutions are funded by the Australian Government under the Higher Education Funding Act 1988 (Cwlth). In 2003-04 the operating revenue (before extraordinary items) of these institutions amounted to $11,874m, 41% of which came from Government grants. Government funding is also provided to higher education institutions through various research programs by the Australian Research Council and the National Health and Medical Research Council.

In addition to government funding, institutions receive revenue from students who are required to contribute to the cost of their education through the Higher Education Contribution Scheme (HECS), and from other fee-paying students. Higher education fees and charges have increased in importance in recent years. In 2003-04, 16% of operating revenue was raised from HECS, while other fees and charges accounted for a further 22% of operating revenue. These fees and charges included $1,700.1m from fee-paying overseas students, representing 65% of other fees and charges - a rise of 17% since 2002-03. The article, 'Paying for university education', in Year Book Australia, 2005 provides more information on the operation of HECS.

Some institutions rely more heavily than others on fees paid by overseas students. For example, the Central Queensland University, Curtin University of Technology in Western Australia and the Royal Melbourne Institute of Technology received 38%, 24% and 22% respectively of their revenue from fee-paying overseas students. This is well above the overall national average of 14%.

Unless otherwise noted, content on this website is licensed under a Creative Commons Attribution 2.5 Australia Licence together with any terms, conditions and exclusions as set out in the website Copyright notice. For permission to do anything beyond the scope of this licence and copyright terms contact us.